Thu. Sep 24th, 2020

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SEC flags 2 unauthorized funding scheme operators

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THE Securities and Exchange Commission (SEC) is advising the public to stop engaging with Mining City and Hoton Retail and Services, Inc. as these groups are operating unauthorized investment schemes.

In separate advisories on its website, the corporate regulator said it received numerous reports about representatives from Mining City and Hoton soliciting investments from the public.

Upon investigating, it found that the two do not have the necessary license required from companies to sell securities and solicit investments.

The public is warned not to invest or to stop investing in these groups, as their operations are not regulated by the commission.

The SEC said the groups are violating the Securities Regulation Code for the unauthorized sale of securities. Such activity may be penalized with a maximum fine of P5 million, imprisonment of up to 21 years, or both.

In the advisories, the SEC detailed the operations of the two groups and how they solicit investments.

In the case of Mining City, the company runs a website where it claims to be a cryptocurrency firm. It has presence in various social media platforms where it invites the public to invest in bitcoin vaults at a minimum of P16,500 and a maximum of P693,000.

After investing, members are promised a return of at least $1.5-$2 and at most $69-$92 every day, depending on the plan they avail of. Bonuses are also committed to members that invite others through direct or indirect referrals.

The SEC said these “Mining City Contracts” are equivalent to securities in the form of investment contracts, as these are tools that require investments in exchange of profits derived from others’ effort.

On the other hand, Hoton is a kitchenware retailer that is registered as a corporation with the SEC. The regulator said the company offers a franchise program where “business partners” may invest in a Hoton store and get returns from the store’s income.

To invest, an individual must pay P100,000 up to P14 million in Hoton stores. In exchange, the investor will get a 1% monthly income, or 12% annual income, on top of a 40% per annum profit sharing and a 100% capital return after five years.

The SEC said while Hoton is a registered business, it does not have the authority to sell securities to the public, as this would require a secondary license.

It warned that salesmen, brokers, dealers, and agents behind Mining City and Hoton may be held criminally liable for their unauthorized activities.

Mining City and Hoton were sought for comment on the SEC advisories, but were not able to respond as of press time. — Denise A. Valdez



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